fin534

In order to expand its business, Auto Parts Distributing, Inc., is considering the purchase of four pickup trucks at a total cost of $180,000. The company expects to keep these trucks for four years, then sell them. The company expects these trucks to generate a after tax net cash flow of $95,000 in year 1, $90,000 in year 2, $85,000 in year 3, $80,000 in year 4, and to sell after four years for a total price of $30,000 non-taxable. The company’s marginal tax rate is 35% and its cost of capital is 12%.

Calculate:

a. After tax cash flow for each year 1 through 4 (ignore depreciation)
b. Payback period
c. Profitability Index
d. Net Present Value
e. Internal Rate of Return

  1. 👍 0
  2. 👎 0
  3. 👁 56
asked by jan

Respond to this Question

First Name

Your Response

Similar Questions

  1. economic systems

    what are the three spin-off jobs that are directly related to the auto industry? parts manufacturer, parts distributor, body shops, glass shops, auto radio installer, designer, etc. Car washes, programmers (for auto electronics).

    asked by jr on December 3, 2006
  2. law

    hi i just wanted to ask this question because i am in a problem. can someone help with this I operate an auto parts shop. The shop has gone out of business, and all assets have been sold. The following debts remain: 1. $10,000

    asked by Sachin on April 12, 2007
  3. Math:Calculating Investment

    How would I calculate this problem. plz help I don't know how to... An online store that has been successfully growing on its initial angel investment and revenues wants to invest $5 million to expand the business. The bank is

    asked by Mary on November 15, 2013
  4. Business Finance

    Using the FIFO method of inventory pricing, what is the dollar value ending inventory if there were 300 units on hand December 31? Auto Parts annual inventory of Windshield Wipers: January 1, Beginning inventory 300 units@11.00

    asked by Terry on January 22, 2012
  5. U.S. and Global Economics

    An online store that has been successfully growing on its initial angel investment and revenues wants to invest $5 million to expand the business. The bank is willing to lend the business this money at a 10 percent interest rate

    asked by Mary on November 11, 2013
  6. Algebra 1--Please, help me!

    How am I supposed to graph the following functions? 1. A wholesaler is buying auto parts. He has $200 to spend. He receives 5 parts free with the order. The number of parts y he can buy, if the average price of the parts is x

    asked by Victoria on May 19, 2014
  7. U.S. and Global Economics:Involving math

    Just show me how to calculate it and I'll do the rest. I just don't understand how to calculate this problem. Thank you, An online store that has been successfully growing on its initial angel investment and revenues wants to

    asked by Mary on November 15, 2013
  8. Career

    What are some counter or window display ideas for an auto detailing business? Drawings or photos of excellently cleaned and polished parts of cars -- interior sections and exterior sections??? Before and after photos?? ??

    asked by Bryan on April 24, 2007
  9. Math

    I have 2 questions involving inventory Question 1. Your a manager of an auto parts store.Figures below contains your records of the annual inventory figures for windshield wipers. Using the FIFO method of inventory pricing,hat is

    asked by Mary Ann on January 22, 2011
  10. Social Studies

    You are a small business owner in Russia. You must pay bribes and protection fees to officials and the Russian mafia. Which circumstance is the most likely consequence? A) You hire more employees.** B)You limit your business

    asked by Anonymous on May 19, 2016

More Similar Questions